Archive | January, 2013

Well, this is been something of a power month for the Apiary Fund, and we couldn’t be more anxious for what’s coming up! As a part of our January wrap-up, let’s take a look at our biggest headline:

The Investor Profile

An early release of the Apiary’s Investor Profile was actually announced in December, and it’s been a huge hit! This month we extended beyond Apiary associates and launched the Investor Profile to the public.

As our traders have taken the personality test, it’s been interesting to see the many different personalities that have all come together to form this great community. And it hasn’t just been beneficial for us! The Investor Profile has provided our community of traders an opportunity for serious introspection and trading system adjustment. The new Investor Profile can be found here.

As for what’s coming up, I hope you’ve marked the Winter 2013 Traders’ Summit in your calendars! The three-day event starts on February 25, and there will be plenty of Q&A, so come prepared with any questions or topics you want to discuss with Apiary’s instructors and risk managers! There will also be some live trading sessions and training activities! Visit the Traders’ Summit site to learn more and reserve your seat!

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Yes! There are so many variables to investing; often it is difficult for the average investor to know where to begin. To make it easier for investors to understand their personal investing type, Apiary Fund launched its Investor Profile.

The Investor Profile started out as a project aimed to identify what makes an investor successful. We quickly realized that every investor is different and success comes when you can identify your strengths and weaknesses and then play to them.

Motivation, confidence, commitment, self-esteem, reasoning, and emotions are all contributors to the inner qualities influencing your ability to make investment decisions.

The Investor Profile determines the investor’s personality through 28 questions that have them select one of four words with which they most and least identify. Each investor receives a primary and secondary personality type that will help identify their overall profile.

It focuses on four personality types of traders:

Aggressive – Quick to enter a trade, but may exit quickly when a loss appears

Intuitive – Relies on emotional intuition to get in and out of trades

Analytical – Analyzes every possible variable before taking action

Methodical – Likely to trade on a system, not much regard to gains and losses

There is no such thing as a ‘bad profile’ for an investor. The Investor Profile simply identifies characteristics that people should know about themselves before they invest. After the assessment, the investor can see traits they may need to adjust and how they might respond to market changes.

After getting the results of the Investor Profile, participants have the option to obtain an eBook that goes into more depth about each of the 16 possible profile personality types. The additional information includes areas such as how you view yourself, basic desires and motivations, behavior under pressure and possible areas of improvement.

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The Apiary Fund has a goal. We want every associate who joins our community to become a consistent and profitable trader. The road our associates travel is marked with several milestones along the way. Sometime is easy to lose the perspective of progress along the way.

I am reminded of a story about two boys who were digging a hole in front of their home. As they were digging, one of boys came up with an idea.

“What if we could dig a hole all the way through the earth and come out the other side?”

After some discussion, they decided to give it a try and started shoveling with great earnest.

Meanwhile, a few of the neighbor kids noticed the hole they were digging and, out of curiosity, came over to see what was going on.

“What are you doing?” asked one of the neighborhood kids.

“We’re going to dig a hole all the way through the Earth!” answered both of the boys excitedly.

The neighbor kids began to laugh and told the boys that digging all the way through the Earth was impossible. The boys were clearly disappointed with the lack of support from their peers.

However, after a minute of silence and reflection, excitement returned to the eyes of one of the boys and he picked up a jar full of spiders, worms, and insects. The boy removed the lid and showed the contents of the jar to the scoffing kids, “Well, maybe we can and maybe we can’t, but even if we can’t, you should see some of the cool stuff we’re finding on the way!”

As you work and toil in pursuit of the Apiary Fund goals, there are three lessons we can learn from the boys who tried digging through the earth:

Never underrate the value of your progress. Reaching the goal is not the ultimate measure of success. There is great success in the progress. There is great satisfaction in the milestones. There is great joy in the journey. Here is one of my favorite quotes:

“Life is like an old time rail journey…delays…sidetracks, smoke, dust, cinders and jolts, interspersed only occasionally by beautiful vistas and thrilling burst of speed. The trick is to thank the Lord for letting you have the ride.” (Gordon B. Hinckley, 1910-2008)

Don’t surrender to negativity. No matter what progress you’ve made in your goal, not everyone will see the full vision of your success. But you don’t have to surrender to their negativity.

Pick up treasures along the way. It’s important to remember as you pursue your goals that you can pick up a lot of “cool” things in the course of your journey. I remember wishing I had a mentor who could take me under his wing and show me everything I needed to know to become a successful trader. The fact is, I had many mentors and they all gave me treasures of wisdom that has benefited me in great measure throughout my life.

Learning to trade is a journey – an old rail journey – full of bumps and jolts and dust and smoke. The unpleasantness of the journey is also part of the marvel. It’s part of what makes the journey unique. In fact, it only helps elevate the magnificence of the success. Sure, others may scoff and poke fun, but successful traders look beyond the naysayers and keep a positive perspective.

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Let’s face it—when it comes to investing, everybody has something to say. But whatever you do, don’t fall prey to bad investing advice! There are lots of reasons to never take market tips from others, but I’ve found the following five to be imperative to my success as a trader:

5. Different goals
Whoever is giving you the tip may have a long term outlook on the market and may be willing to hold the investment for 20 years until they retire. Your objective may be to make a daily income. You shouldn’t take their word for your investment. Rise and fall on your own knowledge of the markets.

4. UncertaintiesThere are so many uncertainties that it’s amazing that people ever accept tips from others. When someone gives you market tips, you should ask yourself whether or not you know their knowledge level. They may have a degree hanging on their wall, but did they pay attention in class? Did they pass their tests? Would you trust this person to have done proper due diligence on their recommendation? There are so many unknowns. At the very least, if you do your own research, you’ll have no one to blame but yourself.

3. Different investing methods
A mutual fund invests differently than a hedge fund. A commodity pool invests differently than a retirement account. If you are taking advice from someone, make sure that their objective with trading are very close to the same as what you would do. Most of the time when you dig into it you will find that they are not the same.

2. They don’t care about your money
Believe it or not, the person who cares most about your money is you. You worked hard for the money that you have so before you take a risk you should evaluate the potential outcomes. How many people include a budget when they plan a family vacation? How many of those same people don’t know how much money they are looking to make when they place a trade?

1. Ulterior motivesJust like we saw Al “Mr. Green” Gore recently sell out to the biggest oil company, you don’t know if the person giving you the “tip” has something else that he is trying to do. Remember to always, always, always do your own research!

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Traders new to the world of foreign exchange often don’t understand the very tool that makes their trading possible: Leverage. Though the concept of leverage has gotten some negative heat in recent years, it’s one that makes the markets accesible to new traders with little funds!

Leverage is like a short-term loan a broker gives a trader to allow for more buying power. Laws vary around the world, but in the Unites States, brokers are allowed to give traders fifty-to-one leverage. This means that whenever a trader puts $1 into an investment, a broker will match it with $49. This leverage is a great advantage afforded to currencies traders, as it can significantly expand a trader’s profit potential.

Let’s take a quick look at how leverage works:

You see indications that the US dollar is going up in comparison to the Japanese Yen. So you want to purchase 1 regular lot, which is going to cost you $100,000. Your broker, however, has given you 100 to 1 leverage. This means that you can borrow $99,000 from your broker as long as you have at least 1% of the lot size in your account.

Since you were buying at a 1% margin, $1000 US dollars are set aside so that you can open up the trade. You now control $100,000 US dollars worth of Japanese Yen. Let’s assume the exchange rate does indeed rise one cent and you close your position. At first glance this might sound like just a slight increase, but that seemingly insignificant climb earned you a cent for every dollar you had leveraged. You made roughly $1,000 US dollars.

We can simplify this idea by thinking about a home loan. I don’t have the money to buy a $200,000 home outright, but I do have $20,000. I can use that $20,000, or 10%, as a down payment, and the mortgage lender will match it with the remaining 90%. Then, if the house’s value has appreciated in five years, I can claim a profit! However, if the house depreciates to $150,000, not only do I have to take the loss, I still have to pay back my loan.

Amplifying a movement’s effect works two ways; with greater profit potential comes greater risk, so losses can be very large as well. With this in mind, it’s not hard to understand why Apiary teaches strict risk management methods!

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You have precious little time to make income in life. If you divide life into fourths, you only have a quarter of your life – or 20 years – to really grow your lifetime earnings. Lifetime earnings are the collective income a person receives through a myriad of sources throughout the span of their life. The primary source of lifetime earnings is your job, but experts say that may not be enough. It’s becoming more and more important to use investing cash as a significant source for lifetime earnings.

According to data received by the Census Bureau, the average per capital income in 2011 is a paltry $27,915 with households earning only $52,762. Studies show that the shortfall between lifetime income and lifetime needs is over $50 billion in America and inflation and taxes are making the trend worse. With the gap between lifetime income and needs growing, having some investing cash is important since its one of the only sources of income that is able to extend a person’s lifetime earnings without extending the amount of hours they work.

But let’s face it. Investing cash is hard to find – especially in our economy. With rising taxes and increasing inflation whittling at your wages, finding those extra pennies requires much more than a pinch. Fortunately, there are ways of finding investing cash beyond your annual income. Here are some suggestions to help you get started:

Sell Some Assets to Make Investing Cash

Most homes have a tidy sum of investment money sitting in closets, out in the garage, or stuffed in a drawer. The expected ROI (return on investment) for a closet full of old clothes is much less than the cash equivalent invested in your favorite mutual fund. So have a yard sale and make a little extra investing cash!

Stop Going to McDonalds and Save Investing Cash

The size of the fast food industry in 2010 was $184 billion. Needless to say, the gap between lifetime earnings and needs could be drastically reduced with fewer trips to McDonalds. Saving $5 on fast food and convenience stores can add up to $25 a week, or up to $100 of investing cash a month.

Investing Groups Offer Free Investing Cash

Another source of investing cash is the financial industry itself. It is common practice in the industry to provide investment money to people who have a successful investing track record. The challenge is becoming successful without having the cash to prove it. One solution might be Apiary Fund. Apiary Fund is an investor education company that gives people investing cash to manage while they learn from professional investors how to manage money. It’s kind of like on-the-job training. You must complete their training program, which requires a small tuition fee and practice in a simulated account, before they fork over the investing cash, but they pay cash for your share of the profits, so it’s a fantastic way to earn while you learn!

Look no further than a list of the world’s wealthiest people and you’ll discover that producing income from investing cash is an effective way to increase your lifetime earnings and you don’t have to be a huge wage earner to do it. Through small – yet effective – resources, you can pull together a nice sum of investing cash that you can put to work to grow your lifetime earnings.

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Investing skills are developed over time like learning to play the piano. You wouldn’t expect to play a concerto the day you first sit down at the piano, so why do people expect a great performance when they place their first investment? It’s interesting to me that people put more time into learning an instrument than they do in learning to manage their assets more effectively. The probability of positive returns is so small in music, yet we commit so much time. Contrastingly, the probability of a positive return is so great in the financial markets, yet we commit so little time. It’s an anomaly. Let me suggest three things you can do to improve your investing skills:

1. Make Time to Develop Your Investing Skills

Investing skills requires time to develop. My daughter’s piano teacher expects a half an hour of practice everyday. The book Outliers, by Malcom Gladwell, puts forth the premise that to be an expert in your field requires a devotion to one’s craft for at least 10,000 hours. I am not sure that successful trading requires 10,000 hours, but I do know that if you do not set aside time to practice, you’ll never master the craft. The fact is simple: successful investors – professional or otherwise – set time aside to master their investing skills.

2. When Your Practice Your Investing Skills, Keep it Real

One challenge in practicing to develop your investing skills is that simulation is easy to cheat. Whether you’re trading on paper or through a demo platform, it’s easy to let things go. Going back to my little piano performer, she sometimes gets sloppy in her posture, fingering, timing and tempo. I remember her teacher telling her, “Practice does not make perfect. Perfect practice makes perfect.” Since investing is a skill, keep things as real and disciplined as possible so that you practice is beneficial in real life environments.

3. Keep Your Eyes Open for Ways to Develop Your Investing Skills

The good Lord gave you eyes to learn. When practicing your investing skills keep your eyes open and stay observant. Watch how the market forms, how it develops. Watch how your strategies interact with the market during the repetitive iterations of your practice sessions. Skill is developed through testing, observation, adjustments and more testing, but skills development cannot occur if you don’t see the details in both the big AND small picture. My daughter’s performance on the piano can be altered dramatically depending on the position and pressure of the strike of her finger on the keyboard. Developing your investing skills requires your attention to detail and your attention to detail will pay dividends in your performance.

I know that not everyone shares my love and passion for investing. I know there are returns from learning an instrument that cannot measured in monetary forms. I know that not everyone has the capacity to put the time into practicing his or her investing skills as I have. Fortunately, investing skills can yield positive returns quickly and a little practice goes a long way. Investing is a skill that has a high probability of success. Investing skills can be learned by anyone with the desire to master it.

Disclaimer

Investing in securities, currencies, and/or contracts associated therewith carries inherent risks. No person, institution, or entity, including the Apiary Investment Fund, can guarantee a return on investment for such transactions. Neither the Apiary Investment Fund nor its representatives will recommend the purchase, sale, or transaction advice for a specific security.